Noble Energy announces 2018 results, provides 2019 guidance

2/19/2019

Photo: Noble Energy Chairman and CEO Dave Stover.

HOUSTON -- Noble Energy, Inc. has announced fourth quarter and full-year 2018 financial and operating results. In addition, the company will be focused on delivering sustainable organic free cash flow in 2020 and beyond.

Sales volumes of 350 Mboed exceeded the top end of guidance, including record production from the DJ and Delaware Basins. U.S. onshore oil averaged a quarterly record of 118 Mbopd, up 18% from the fourth-quarter 2017.

Noble Midstream Partners realized record gathering throughput across all product streams and continued its 20% annual distribution per unit growth.

Sold over 1 Bcfed of natural gas equivalents, gross, from the company’s Israel fields.

Returned $124 million to shareholders through the company’s dividend and share repurchase program.

Total financial liquidity at the end of 2018 was $4.7 billion. Proceeds from asset sales in the fourth quarter totaled $226 million, including cash received for the divestment of the Company’s interest in Tamar Petroleum and miscellaneous non-core U.S. onshore interests.

David L. Stover, Noble Energy’s Chairman and CEO, commented, “Noble Energy made significant strides in 2018 as the company continued to preserve returns over volume growth across our global portfolio. This was evidenced in the second half of the year as we moderated our U.S. onshore activity to protect margins, enhance capital efficiency and increase net cash flow generation. We have now transitioned all three of our onshore basins to row development, which is driving both cost and well productivity efficiencies. Offshore, we are nearing the start-up of the world-class Leviathan project, which is scheduled to deliver first gas by the end of 2019. In addition, we executed pipeline agreements that will enhance our delivery of natural gas to the region. During the year, we also implemented a share repurchase program, increased our dividend, and reduced leverage, following through on our commitment by returning more than $1 billion to equity and debt investors. Overall, our successes in 2018 advanced our ability to deliver sustainable long-term value and organic free cash flow."

Full year 2018 highlights

Returned more than $500 million to shareholders, including $295 million through the company’s share repurchase program and $208 million through Noble Energy’s quarterly dividend.

Strengthened the company’s balance sheet by paying down $609 million in Noble Energy debt.

Enhanced the portfolio to focus on high-return U.S. onshore liquids and international gas by divesting the company’s Gulf of Mexico assets and midstream ownership in Appalachia.

Sales volumes totaled 353 Mboed, up 11% as compared to 2017, on organic capital expenditures funded by Noble Energy of less than $3 billion.

Implemented row development in the DJ and Delaware Basins and grew U.S. onshore oil production 26% as compared to 2017.

Received approval for the first large-scale Comprehensive Drilling Plan across the Company’s Mustang area in the DJ Basin.

Progressed the Leviathan project, offshore Israel, to approximately 75% complete.

Executed gas sales agreements for up to 700 MMcfd of natural gas, gross, to customers in Egypt from the Tamar and Leviathan fields.

Negotiated Heads of Agreement to progress monetization of natural gas from the Alen field in Equatorial Guinea.

2019 guidance

David L. Stover, the company's chairman and CEO commented, “Recent market dynamics, including increased commodity price volatility, further highlight the need for our industry to prioritize capital discipline and corporate returns over top-line production growth. Our 2019 capital program and early 2020 outlook aligns capital investment with the environment and sets the stage for Noble Energy to generate sustainable organic free cash flow in 2020 and beyond.”

Stover added, “By the end of 2019, our high-return U.S. onshore business is anticipated to be self-funding, and it will underpin the company’s production growth of five to 10% per year, before the additional impact of major projects. We will be completing spend for Leviathan, offshore Israel, this year and commencing production and cash flow from the project by the end of the year. Our differentiated portfolio, combining high-quality U.S. onshore assets with long-life offshore production, provides competitive advantage through low base production declines and low maintenance capital needs. Our early 2020 outlook provides over $500 million in free cash flow at strip pricing, which we plan to return to shareholders through the dividend and share repurchase program.”

2019 plan highlights

Organic capital expenditures funded by Noble Energy are planned at a range of $2.4 to $2.6 billion, 17% lower at the midpoint compared to 2018.

Total company volumes are anticipated in the range of 345-365 MBoed, an increase of 5% at the midpoint as compared to 2018.

The company’s U.S. onshore business is anticipated to deliver asset-level free cash flow by the end of 2019, while delivering total volume growth of approximately 10% and oil production growth of 13% from 2018 levels.

First gas sales from Leviathan are expected by the end of 2019, delivering substantial production and cash flow growth in 2020.